Smart Mobility: Waiting for the Airbnb of Mobility

In July, mgm consulting partners consultants Per-Alexander Zimmermann and Thies Rathmann published the study “Smart Mobility: Analyse von Mobilitätsplattformen”, in which they took a closer look at the current offerings of 11 platform providers. In this interview with the mgm editors they now report on the challenges that mobility platforms face in Germany and explain why no provider has yet emerged as the undisputed top dog.

mgm live: Per, Thies, a few weeks ago you published your study on Smart Mobility. How did you hit on the idea of dealing with that topic?

Per-Alexander Zimmermann: The idea for our study took shape as part of a project. At the beginning of the year we assisted a Smart Mobility startup with business development in terms of both method and content. In the process we arrived at a point where we needed an overview of what was on offer. We realized relatively fast that we would like to develop that snapshot in greater detail and above all to update it. That is what prompted us, once the project was completed, to write our study.

mgm live: Who do you see as the study’s target group? For whom are your collected findings of interest?

Thies Rathmann: The potential readership is very widespread. In the final analysis the study is of interest for everyone who is involved in mobility. They can be urban planners, companies, app providers or vehicle manufacturers such as automakers. In theory it can even be of interest for an end customer who is looking to opt for a platform and searching for information about which apps are available and what they can do.

Per-Alexander Zimmermann: Developments in the area of mobility have the potential not just to strongly influence current business models but to totally change them. Vehicle manufacturers are a case in point. They risk no longer being providers of mobility in the form of automobiles but being reduced to the second rank of suppliers to mobility providers – partly because car ownership is growing steadily less attractive, at least for the younger generation. We have witnessed a similar trend among telecommunication carriers, who now only provide the lines and thereby run a risk of losing end customer contact to the providers of telephone hardware. That is why carmakers like BMW, VW and Mercedes are trying to retain customer relationships by means of mobility offerings of their own in the area of car sharing. So these companies will need to react to changes in mobility and to Smart Mobility.

mgm live: That, then, is a conclusion you have drawn from your study. Are there any other findings?

At present the landscape is one of many different platforms.

Per-Alexander Zimmermann: I believe that there is not at present a mobility platform in a market-dominating position that covers everything. In the years ahead a number of large, key platforms will, however, evolve that will have – and will need – a very strong capital base because the initial capital requirement in this sector is very high. At present the landscape is one of many different platforms as presented by us in the study.

Thies Rathmann: In the final analysis it’s a patchwork rug. That is apparent from the fact that distribution areas are largely limited to the major cities and that nationwide coverage as offered by some providers is usually achieved only by means of car sharing and not via local or regional public transportation. Getting from A to B in a city is no longer a serious problem. The platform provider can concentrate on public transportation, a car sharing operator or two and maybe a cycle hire scheme. Once you leave the city it becomes complicated. Regional fragmentation of public transportation is sure to be one of the major challenges that mobility platforms will face.

mgm live: Is this fragmentation of mobility providers in your opinion the main reason why there is no market-dominating platform yet? Or are there other reasons too?

Thies Rathmann: Fragmentation is one reason. Real-time data is in my view another major challenge. In transportation much can change in minutes if, for instance, there is a railroad incident. In addition, the different modes of transport are not yet networked with each other.

Per-Alexander Zimmermann: We must also not forget that mobility platforms depend on the cooperation of mobility providers and that they too are companies with commercial interests of their own and do not want to lose direct contact with their customers. So why should they share their data? This question is the key problem that a platform provider faces. The platform would naturally like to promise its customers they can book with it their entire journey from door to destination. A mobility provider or two might then object, saying: “No, I don’t want that. The most that I want is for you to direct the customer to my website. And I, not you, will book the journey.”

mgm live: Is it in these circumstances at all realistic to expect there to be at some stage one or two market-dominating platforms that can deliver all of the relevant data in real time?

Thies Rathmann: I believe that to be a realistic expectation. It will depend, for example, on whether Google wants to move into this area in a big way. Google would have the capital with which to prevail. But I also believe that we as end customers have our own ideas on what we expect from a platform provider. We think the provider must offer everything and map everything. Time will tell which strategies prove to be successful. It could well be that niche providers are extremely successful and that many small providers have good offers in limited areas and make no claim to provide everything.

Per-Alexander Zimmermann: I personally feel that some stage we will see an Airbnb or of mobility. For that the financial power in the background will be decisive, but the offering itself must simply be good. What counts is the benefit that the platform provider offers the customer. As long as the focus is customer-centered top dogs will sooner or later emerge.

mgm live: What, in your view, must a top dog of this kind offer?

The focus on customer requirements is of crucial importance. The customer would like to travel from A to B in the best possible way and to be notified of any changes en route.

Per-Alexander Zimmermann: Here and now we cannot say for sure what this platform must provide. As I said earlier, the focus on customer requirements is of crucial importance. The customer would like to travel from A to B in the best possible way and to be notified of any changes en route. He wants to be managed, as it were, if a change is on the horizon, regardless whether an accident causes a tailback, a signaling fault impedes rail traffic or the train driver has not made it in time. The reasons interest the customer, which is not a bad thing. But the main question is what to do next. Platforms must identify problems of this kind at an early stage and suggest suitable alternatives. Only then can the customer lean back and relax because everything is running smoothly and if there is a mishap his app will notify him that he must get off the train a station earlier because a section of the track is closed but that a rail replacement bus is waiting there to take him to his destination.

Thies Rathmann: One of the key prerequisites for a customer experience of this kind, however, is a strengthening of the Internet infrastructure in Germany. In our study we identified many providers that are strong in urban areas and very familiar with the transportation services that are available. But platforms cannot fulfill our expectations as customers of seamless coverage throughout Germany without countrywide expansion of the cellphone network. Anyone who has ever tried to work on a German train that is not an Intercity Express will be aware of the problems that arise. At times you only need to travel 25 km outside of a city like Hamburg. Germany’s Internet infrastructure lags behind that of other countries significantly. Yet it is one of the essentials if Smart Mobility is to succeed. If Germany improves its performance in this area, mobility platforms will be able to further headway by leaps and bounds.

The study “Smart Mobility: Analyse von Mobilitätsplattformen” (in German) is available to download here.